HBOS considers Abbey National bid

Abbey National shares made further gains today after it emerged that Halifax and Bank of Scotland group HBOS was thinking over a rival bid for the UK bank.

HBOS said last night it was at the “preliminary stages” of reviewing its position on Abbey, which last week agreed to an £8.2bn (€12.4bn) takeover by Spain’s largest banking group, Banco Santander Central Hispano (BSCH).

With any interest from HBOS likely to draw out other UK banking giants, Abbey shares today moved 2% higher to 578p – well above the value of the BSCH offer price. HBOS headed in the opposite direction, however, falling 2% to 698.5p.

Like other UK banks, HBOS had expected to be stymied by the same competition rules which thwarted an £18bn (€27.3bn) Lloyds TSB bid for Abbey in 2001.

And even though a combined group would have more than a third of the UK mortgage market, the idea of a bid by HBOS has not yet been ruled out.

The statement from the Edinburgh-based company said: “The process has a long way to go and something or nothing may come of it.”

The interest emerged after BSCH’s approach for Abbey received a lukewarm response from both sets of shareholders, particularly as UK investors face the prospect of holding shares in a euro-denominated company.

One reason for the interest of HBOS is that it may believe the competitiveness of the UK mortgage market allows it to overcome regulatory concerns.

Analysts also believe the emergence of a fifth major banking group – with the creation of HBOS in September 2001 – has changed the regulatory picture since the blocking of the Lloyds bid for Abbey.

Exports of goods across the Irish Sea have increased again despite the dampening effects of the slump in sterling since the Brexit vote which ought to have weighed on sales into the UK for firms based in the Republic.